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How Bias Prevents Internal Theft Reporting

Posted on 8/26/14 10:16 AM

As a consultant and loss prevention service provider, I’ve had the opportunity to listen to a full spectrum of opinions on employee theft. Few, if any, business practitioners take issue with the fact that employees steal and most agree it is the biggest challenge facing companies.  In my seminars I often share the industry opinion that internal theft accounts for 40% to 60% of all company losses. Again, most regional, district and store managers are amicable to the idea. But that is a statistic for the entirety of the industry,bigstock-Shoplifting-In-A-Supermarket-4583278 my interest has always been in how individuals perceive the issue as it gets a little closer to home. So I ask store managers to take out a pen and paper and write down their answers to the Percentage Question. The question is simply to apply a percentage of loss caused by internal theft for the following:

The Industry

Their Company

Their District

Their Store

The results are interesting, if not predictable, for someone who has made the study of psychology a life-time pursuit. 

Most participants rely on the previous given statistic and agree that 50% of industry losses are caused by employee theft. Some even believe their company has the same problem. As we get closer to home, however their district the number drops—usually to 30%. It’s when we arrive at the store level that we see the largest change in perception. With few exceptions, most store managers report the belief that employee theft is responsible for somewhere between zero (yes, none) and 20% of their losses.

So although they can accept and understand the problem of internal theft in theory, when it comes to the place and people they interact with, the theory falls apart. There are probably a number of cognitive biases working against the question, but the two most likely are the Belief Bias and Benevolent Prejudice. In the Belief Bias, the logical strength of an argument—in this case the statistics on employee theft—are unacceptable because of the manager’s believability in the conclusion—half my losses were caused by MY employees. The conclusion is hard to accept because of Benevolent Prejudice. When we create “in-groups”— my employees— and “out-groups”—other store employees— the in-group, by association, gains more positive emotional responses and are seen as “better, nicer, more honest, harder-working” etc. 

Belief and Benevolent Bias is difficult to overcome. In some cases, such as those involving politics, religion or family members, difficult becomes impossible. Fortunately, the strength of the store “in-group” is not as strong as these other mentioned types. Managing these biases is, however, critical to identifying and removing employees who steal. Most of the early indicators of dishonesty are observed by store associates and store managers. If they don’t believe it can or is happening, they won’t be vigilant in looking for it or convinced their suspicions are correct—thus no reporting.

The solution lies in something else we find in the Percentage Question. There are managers who answer to the other extreme. While their peers are reporting 5% employee theft, this smaller group is writing down 75% to 90%. The differing factor—the higher reporters have had a dishonest employee. Their personal experience with the break in trust opens them to not only accepting the general statistic but applying it to his or her own environment.

Obviously, as business operators, it is preferred that every store Not have a dishonesty case in order to get our managers on-board with looking for the potential signs. So what can we do to, if not eliminate, at least reduce the bias?

Training, education, and awareness are of course the basic foundation. We should provide information on what to look for, why good people make bad decisions, and how to report suspicions. We should also assure employees that such reports are handled responsibility and that no one will lose their job based on a observation alone—that is, a thorough and unbiased investigation will occur and care will be taken to protect all parties involved.

The second and more important influencer is to discuss real cases that have occurred. I’m not suggesting naming names, but rather generalizing the information and then sharing the internal apprehension details. Some companies fear the dissemination of such information. They are concerned it may educate thieves or result in higher outbreaks of dishonesty. There’s little statistical proof to support that notion. Employee steal because they believe they can get away with it—such stories drive home the fact that they can’t, thus reducing the temptation. Equally, because of bias, most employees and managers don’t believe people they “know” steal. These shared case stories begin a narrative that in can and does happen. And by changing the narrative, we can build within our store associates the expectation that it is possible…even in their store.

Topics: employee theft

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